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for commodities and derivative financial products.6 [Footnote 6. ICE Trust is not a bank as defined in the Bank Holding Company Act (“BHC Act”) (12 U.S.C. § 1841 et seq.). See 12 U.S.C. § 1841(c)(1). ICE LP, ICE GP, and ICE, therefore, would not be bank holding companies for purposes of the BHC Act. No bank holding company will directly or indirectly control more than 5 percent of the voting shares of ICE Trust. End footnote 6.] ICE has entered into an agreement to acquire The Clearing Corporation (“TCC”), a derivatives clearinghouse.7 [Footnote 7. TCC also will become a wholly owned subsidiary of ICE LP. TCC will provide certain clearing services to ICE Trust. End footnote 7.]

ICE Trust is being organized to reduce the risk associated with the trading and settlement of CDS transactions.8 [Footnote 8. In the simplest form of a CDS arrangement, the seller of a CDS agrees to pay the buyer the full principal amount of the debt obligation underlying the CDS in exchange for periodic payments to cover the cost of the credit-risk protection. The seller is then obligated to pay the buyer if the maker of the obligation defaults or declares bankruptcy. In index-based CDS contracts, the parties’ payment obligations are based on an index of debt obligations of multiple companies, such as an index of U.S. investment-grade or emerging-market bonds, rather than on a single obligation. End footnote 8.] The CDS market as measured by the total notional amount of outstanding contracts has grown significantly, from approximately $6.4 trillion by year-end 2004 to approximately $57.3 trillion by mid-year 2008.9 [Footnote 9. See Bank for International Settlements, OTS Derivatives Market Activity in the First Half of 2008 (November 2008); Bank for International Settlements, OTS Derivatives Market Activity in the Second Half of 2005 (May 2006). The notional amount refers to the principal amount of obligations underlying CDS contracts. End footnote 9.] In the second half of 2008, however, dealers in CDS contracts were able to reduce the total notional amount of outstanding contracts by approximately $32 trillion through regular and frequent portfolio compression activity. CCPs interpose themselves between counterparties to financial contracts, becoming the buyer to the seller of the contract and the seller to the contract’s buyer. In the absence of a CCP, each market participant bears the risk, known as counterparty credit risk, that one or more of its counterparties will default. By interposing itself between participants and thereby assuming counterparty credit risk,

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